Fresh geopolitical tensions in West Asia and major corporate developments are set to dominate investor sentiment on Wednesday. While a US-led naval blockade against Iran has pushed crude oil prices higher again, Asian equity markets have remained resilient. Meanwhile, reports that Fairfax Holdings is close to acquiring a controlling stake in IDBI Bank and IBM's historic share price collapse in the US are likely to keep Indian banking and IT stocks in focus.
Gift Nifty closed Tuesday night at 24,031 and moved up to around 24,076 in early trade, indicating a positive start for Indian equities despite global geopolitical concerns.
India's southwest monsoon rainfall deficit widened to 21 percent as of July 14, according to the India Meteorological Department.
Kerala remains among the worst-hit states, with the rainfall deficit increasing to 31 percent. Bihar, Punjab, Gujarat, Karnataka and Andhra Pradesh have also recorded rainfall shortages exceeding 20 percent.
Nearly half of India's geographical area has received rainfall that is more than 20 percent below normal.
US markets closed higher on Tuesday after concerns over further interest rate hikes eased.
The US administration withdrew its proposed Hormuz transit toll, easing pressure on crude oil prices. Softer-than-expected US consumer inflation and reassuring testimony from the Federal Reserve Chair before Congress further improved investor sentiment.
Major US banks including JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs reported second-quarter earnings that beat market expectations, lifting banking stocks.
However, IBM shocked investors after reporting weaker-than-expected quarterly results. The stock plunged 25 percent, marking the biggest recorded single-day decline in the company's trading history. IBM attributed the slowdown to weaker corporate spending on software and hardware.
SpaceX shares slipped 2.2 percent to $136.
The Dow Jones gained 9.63 points (0.02 percent) to close at 52,508.27, the S&P 500 rose 28.25 points (0.38 percent) to 7,543.59, while the Nasdaq Composite advanced 233.83 points (0.90 percent) to 26,107.01.
US index futures traded modestly higher on Wednesday morning.
Dow futures: +27 points (0.05 percent)
S&P 500 futures: +10 points (0.12 percent)
Nasdaq futures: +112 points (0.38 percent)
Indian ADRs ended mixed in New York.
HDFC Bank recovered after initial losses to close at $26.23.
ICICI Bank ended at $28.99.
Infosys rebounded after a sharp fall to finish at $11.12.
Wipro recovered to close at $1.86.
European markets extended their gains for another session on Tuesday. Most Asian markets traded higher despite escalating geopolitical tensions.
Kospi: +0.60 percent
Nikkei: +0.50 percent
ASX: +0.45 percent
Hang Seng: +0.90 percent
Shanghai Composite: -0.10 percent
Indian equities snapped their three-day winning streak on Tuesday as rising crude oil prices and concerns over disruptions around the Strait of Hormuz weighed on sentiment.
Foreign institutional investors remained net sellers, offloading shares worth ₹739.69 crore, while domestic institutional investors purchased equities worth ₹2,927.71 crore.
Market closing figures:
Sensex: 77,054.94 (-561.46 points, -0.72 percent)
Nifty 50: 24,052.05 (-158.95 points, -0.66 percent)
Bank Nifty: 57,462.30 (-1.15 percent)
Nifty Midcap 100: 62,766.40 (-0.44 percent)
Nifty Smallcap 100: 19,227.35 (-1.01 percent)
Market breadth remained weak.
BSE: 1,431 stocks advanced; 2,838 declined.
NSE: 1,011 advanced; 2,259 declined.
Realty, IT, banking, financials, automobiles, tourism and defence stocks declined, while pharma, healthcare and metal stocks outperformed.
Kalyan Jewellers surged nearly 4 percent to ₹531 after reporting a 38 percent rise in first-quarter sales. The stock has gained nearly 50 percent in just one week.
All four listed commercial banks based in Kerala closed lower amid weakness in banking stocks.
According to media reports, Indo-Canadian investor Prem Watsa's Fairfax Holdings has emerged as the successful bidder for IDBI Bank.
The reported deal values the bank at ₹81 per share, higher than Fairfax's earlier offer of ₹75.
The government is expected to sell its 30.48 percent stake, raising around ₹26,620 crore. LIC, which owns nearly 50 percent of the bank, is also expected to divest about 30.24 percent.
The overall transaction is estimated at around ₹53,000 crore ($5.5 billion), after which Fairfax is expected to make an open offer.
Fairfax already holds around 40 percent in Kerala-based CSB Bank and is its promoter. Market speculation suggests CSB Bank could eventually be merged with IDBI Bank. Fairfax also owns a majority stake in IIFL Capital Services.
IBM's 25 percent plunge has raised concerns over the outlook for Indian IT companies.
IBM said enterprises are delaying spending on software and hardware, raising fears that global technology spending could slow further.
Infosys and Wipro ADRs had fallen by as much as four percent in New York before recovering partially.
Indian IT stocks, which had only recently begun recovering after months of weakness, could remain under pressure.
L&T Technology Services reported better-than-expected first-quarter earnings and secured fresh contracts.
Tata Elxsi posted an 18.2 percent increase in net profit for the first quarter.
Hero MotoCorp will invest an additional ₹1,000 crore in its associate company Ather Energy.
Gold rallied after softer US inflation data reduced concerns over higher interest rates.
Spot gold gained $51.60 to settle at $4,053.70 an ounce and climbed further to around $4,058 in early trade. In Kerala, 22-carat gold fell by ₹80 to ₹1,04,720 per sovereign.
Silver rose to $58.80 an ounce and moved up further to around $59.12.
Other precious metals:
Platinum: $1,635
Palladium: $1,289
Rhodium: $7,600
Industrial metals traded mostly higher.
Copper: +0.60 percent to $13,540.60 a tonne
Aluminium: +0.98 percent to $3,176.55
Zinc, tin and nickel also gained, while lead declined.
Natural rubber prices continued to climb.
In Bangkok, RSS-1 reached $307.20 per quintal and RSS-3 rose to $303.70.
In Kerala, RSS-4 touched a record ₹27,900 per quintal.
Cocoa rose 1.56 percent to $5,933.24 a tonne.
Arabica coffee declined 0.96 percent to $3.27 per pound despite lower production in Brazil. Coffee inventories remain at their lowest levels since March 2024.
The US Dollar Index slipped to 100.92 and eased further to around 100.81 in early trade.
Euro: $1.1436
Pound: $1.3401
Japanese yen: 162.08 per US dollar
Chinese yuan: 6.77 per US dollar
The yield on the US 10-year Treasury eased to 4.585 percent.
The rupee weakened sharply on Tuesday as higher crude oil prices boosted demand for the dollar.
The US dollar closed at ₹96.20, up 58 paise. Early indications suggest a marginal pullback on Wednesday.
In the offshore NDF market, the dollar traded around ₹96.13. The euro stood near ₹109.90 and the Chinese yuan at ₹14.21.
Brent crude briefly touched $88 a barrel on Tuesday before retreating after the US withdrew the proposed Hormuz transit toll.
Brent settled at $84.73 but climbed nearly 1 percent in early Wednesday trade to around $85.64. WTI crude moved up to around $80.04.
Improved risk appetite lifted cryptocurrencies.
Bitcoin: around $64,650
Ether: around $1,875
Solana: close to $78
Sensex: 77,054.94 (-0.72%)
Nifty 50: 24,052.05 (-0.66%)
Bank Nifty: 57,462.30 (-1.15%)
Nifty Midcap 100: 62,766.40 (-0.44%)
Nifty Smallcap 100: 19,227.35 (-1.01%)
Dow Jones: 52,508.27 (+0.02%)
S&P 500: 7,543.59 (+0.38%)
Nasdaq: 26,107.01 (+0.90%)
US dollar: ₹96.20 (+₹0.58)
Gold (ounce): $4,053.70 (+$51.60)
Gold (sovereign): ₹1,04,720 (-₹80)
Brent crude: $84.73 (+$1.43)